Why the FTC Rejected Nvidia’s Antitrust Settlement for $75 Billion Arm Deal

Regulators who normally seek to block mergers between companies that compete with one another are becoming increasingly combative about vertical mergers between companies that don’t.

The latest example is how the Federal Trade Commission handled chipmaker Nvidia’s contentious takeover of Arm Holdings, a designer of chips for mobile devices. Before the agency last week sued to block the deal, the companies offered to settle the case. Nvidia doesn’t compete with Arm, but the deal had been facing vociferous opposition from many of Arm’s customers, who compete with Nvidia. As a result, regulators around the world had been holding up the deal for extensive reviews, though the FTC lawsuit materialized much faster than the companies had expected, according to people involved in the review process.

Nvidia proposed creating an independent company to license Arm’s designs and provide technical support to customers such as Apple, Google, Microsoft and Amazon. Nvidia would give control of the licensing company to new investors, according to three people with direct knowledge of the settlement offer, which hasn’t been previously reported. The investors would eventually list its shares publicly, one of these people said.